Early Crimbo present for tracker mortgages

murphaph

benny79 wrote: »

Of course I done my homework I checked around for the cheapest rate for fixed and variable and who would give me the most etc but no one was jumping out saying take a tracker at the time or explaining what it was? I didnt even know what it was...(just like the ad!)

before you get a mortgage your going to these people for advise banks EBS etc.. and I was been told we can offer you X amount at such a rate! The only advise I was giving is fix it for first year which I didnt!

Plus I was getting a mortgage on my own. so my options where limited in how much I could get afford to pay back and the prices of houses..

To be fair benny you wouldn't ask a car salesman for advice about what car to buy, so why would you trust a bank to give you sound financial advice about what mortgage to take out (with them!)? Anyway, best of luck with your situation. I wasn't trying to be nasty towards you. I realise there's a person behind the username.

murphaph

stevedublin wrote: »

Taking the tracker was effectively betting on low interest rates, how did people know for sure that interest rates were going to be low for so long?

Not exactly, taking a tracker was betting on interest rates not increasing beyond whatever fixed rate was on offer at the time and given Irish lenders only offer fixed rates for relatively short periods (in Germany you can fix for 20 years and have a known mortgage payment for the entirety of the time you have the loan!) then it's not such a risky bet at all really.

I still can't believe how many people took a discount for 12 months on a SVR over the longer term better value of a tracker. A tracker (at the margins offered in Ireland) could never have cost more than any SVR offering, which people were still taking up when trackers had already become available.

Trackers still exist here in Germany by the way, but the margins are more realistic and they track the EURIBOR, NOT the ECB rate!

stevedublin

ChRoMe wrote: »

its linking the mortgage to the more macro state of the economy rather than to the individual bank.

betting on the macro state of the economy rather than the individual bank then.

ChRoMe

stevedublin wrote: »

betting on the macro state of the economy rather than the individual bank then.

Which is what I just said.....

benny79

A car sales man tells you what he has on offer! so if he has a top of the range motor out the back and doesnt tell you about it , how you meant to buy it??

And when your buying things the sales person normally explains whats on offer pro's and con's of each and some maybe push 1 onto but at the end of the day its your choose but least you know everything on sale!

I was only told variable or fixed.

but see your point..

wirelessdude01

benny79 wrote: »

I was only told variable or fixed.

But by your own admission you said you had seen the ad about people saying they didn't know what a tracker mortgage was. Did it never cross your mind to find out or do you always trust what others tell you?

pwurple

ronan45 wrote: »

One thing i never got were the statements like the following.

"A tracker is saving you XXXX over the life of the mortgage"

"Indeed, Michael Dowling of the IMAF, outlined just how valuable they were recently when he pointed out that a 25 year tracker mortgage of €250,000 would require a mortgage write-down of €97,462 to make it worth while giving it up for a standard variable rate"

But when the ECB goes back up to more "normal" rates then surely the value of the tracker will be killed off also. So in effect the tracker was only worth 97K while the interest rates were at this all time low.
in 5-10 years if the ECB rates went up to somewhere between 4-7% would a tracker not be worth a lot less? Am i right in saying that just because the ECB rates are low at the moment doesnt mean they will ALLWAYS be loss making for the bank. Am i right in saying that at some stage next 10 to 15 years these trackers will actually make the bank some return?

Most trackers were taken out in the 2000-2006 period. In 10 to 15 years time (~2028), a lot of them will be paid off, or nearing the very end of the term. Compound interest is front-loaded... you pay most of the interest in the first portion of the loan. Towards the end of the term, it's mostly capital, so any interest rate hikes won't make much difference to the amount owed. Return for the banks at that stage will be minimal.

benny79

Mortgage advisers are called advisers for a reason!

It was 8 years ago I could of seen the AD after I had my mortgage besides was nt the point I was making!

Does nt matter now anyway I cant change it